Gold is starting to look like Swiss cheese these days, with a lot of holes and ready to meltdown into a fondue… the shortened trading day in the US markets on Friday started off with a modest 0.7% drop in gold from $1,190 to $1,182, but it eventually cascaded into a massive 2.65% decline, ending down over $31 for the day to close at $1,165, ahead of the weekend Swiss referendum on whether the SNB should hold a minimum of 20% gold in its reserves. Today, we got the answer, and it was a resounding ‘No’ at 77% of the vote.
Someone seemed to know something during Friday’s equities session as junior miners were shellacked, with GDXJ down more than 12%, and the corresponding 3x leveraged bull (JNUG) and bear (JDST) ETFs making 35%+ moves. Interestingly there seemed to be a lot of new goldbugs and gold bulls joining StockTwits in the last couple of weeks, and their recent bravado led me to believe we were at an inflection point. Of course, the biggest news was the stunning (or maybe not so stunning, if you had been expecting OPEC to not cut their production) 10.3% plunge in oil, which roiled energy names like CVX, COP, XOM. Another double-digit winner was ERY, the 3x energy company ETF (ERX is the bull ETF with a corresponding move in the opposite direction). Even though the S&P 500 was green for most of the morning it eventually succumbed to the selloff in the energy sector, closing red for the day, having touched yet another all-time high. However, airlines were a huge beneficiary of the double whammy of lower oil prices and holiday travel, with UAL, AAL, LUV and JBLU leading the charge.
On the economic calendar this week we have China Manufacturing PMI numbers out tonight at 8pm ET as well as HSBC Manufacturing PMI at 8:45pm. Europe Manufacturing PMI is out tomorrow morning at 4am, US ISM Manufacturing follows at 10am, with Fed Chair Janet Yellen speaking on Tuesday at 8:30am, and an ECB interest rate decision and press conference on Thursday at 7:45 and 8:30am respectively. US jobless claims will be out at 8:30am that day, and all payroll numbers out on Friday at 8:30am.
Have a great week all, trade well, and stay disciplined!